During my years as an editor I've run into a number of clients who've had their work already "edited" by someone else, but they've found themselves discouraged and wanting to give up. Some have even said they feel like their story is no longer their own. When they've shown me what the person did to their work, I've been astonished to find their voice completely mutilated.
Just because a person has a degree in English does not mean they'd make a good editor—or shall I say, book doctor. Believe it or not, even published authors don't necessarily make good book doctors.
Personally, I think the term "editor" should belong to the copyeditors, and "book doctor" should belong to those that understand voice, dialogue, attributions, characterization, plot, etc. Of course, we check for spelling, grammar and punctuation, but in the end, that's the job of a copyeditor. Copyeditors are usually found in publishing houses. Your manuscript will end up on their desk after it's passed the test of "story" (i.e. plot, characterization, dialogue, etc). See the link to The Book Deal under my list of recommended links. There, Alan Rinzler talks about what makes a good editor/book doctor. Instead of the term "book doctor," he uses "developmental editor" and describes what that means. You may find it helpful.
Anyway, it bothers me to see "editors" taking advantage of writers. Some folks are only in it for the money and aren't interested in really helping authors. And other folks, simply don't know what they're doing.
Always be extra careful before you hand out large sums of money. Do your research, talk to previous clients, ask for references. A good editor will be happy to offer these things to you, and they will be willing to answer questions after the edit and/or speak to you on the phone. Be leery of any editor who isn't willing to do these things. Here are some links that would be good to read before you hire an editor: Warnings and Cautions for Writers and Preditors & Editors. If some of you have more, please send them my way, and I'll put them on the site.
My biggest advice on selecting a high quality editor is to ask to speak to (or email) previous clients. The clients already paid their dues, and they got a full edit. They're the ones who can tell you if the editor is worth their price.
Keep in mind, while I can't analyze every detail of the work of every editor here, the ones I put on this site are, in my opinion, the most trustworthy. Check 'em out, and if you're so inclined, hire one of them. :-) Side note: I'm not taking on any clients at this time.
One of the goals of this site is to teach writers how to recognize good editing. The biggest mistake I've seen editors make is to change a person's voice, therefore, killing their story. How can a writer know if someone is destroying their voice? Hang around here for a while, and hopefully you'll learn.
Got questions about what makes a good editor (book doctor)? Send them in: TheBookDoctor.firstname.lastname@example.org.